RBI may hike rates again in August on rise in inflation

download (4)Source: The Hindu Business Line, Jun 13, 2018

Mumbai: Headline inflation surging to a four-month high of 4.87 per cent in May is likely to force the Reserve Bank of India to hike rates once again at its August monetary policy review, analysts said.

The commentary comes a day after industry body, the Confederation of Indian Industry (CII), said monetary policy tightening will increase the cost of doing business and force India Inc to slowdown on investments, which are critical for pushing the growth agenda.

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Retail inflation for industrial workers softens to 3.97% in April

download (3).jpgSource: The Economic Times, Jun 01, 2018

Retail inflation for industrial workers eased to 3.97 per cent in April mainly due lower prices of food items.

“The year-on-year inflation based on CPI-IW (Consumer Price Index-Industrial Workers) stood at 3.97 per cent for April, 2018 as compared to 4.36 percent for the previous month (March 2018) and 2.21 per cent during the corresponding month (April 2017) of the previous year,” the labour ministry said in a statement. The CPI-IW is used for working out dearness allowance and dearness relief for central government employees and pensioners respectively.

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WPI at 4-month high in April; inflation rises to 3.18 % from 2.47% in March

Source: Business Standard, May 15, 2018

New Delhi: Pressure on inflation, retail as well as wholesale, is mounting. While the widely-tracked consumer price index (CPI)-based inflation rate rose to a three-month high of 4.58 per cent, its wholesale price index (WPI) counterpart increased to a four-month high of 3.18 per cent in April.

This might justify the hawkish stance of the monetary policy committee (MPC).

The CPI inflation rate had stood at 4.28 per cent, and the WPI rate at 2.47 per cent in March.The widely-tracked core CPI inflation (non-food, non-oil) rate rose to a 44-month high of 5.9 per cent against 5.4 per cent in this period.

On the other hand, core WPI inflation remained flat at 3.6 per cent.

Though the government did not fully pass on the rise in crude oil prices to consumers owing to the Karnataka elections, fuel prices drove up inflation.

images (1).jpgThe government waited for the Karnataka polls to be over before announcing hikes in petrol and diesel prices by 17 and 21 paise a litre, respectively. So the impact would be seen much more in May than in April.Even then, the inflation rate in petrol zoomed to 9.58 per cent in April from 2.55 per cent in the previous month, while diesel saw prices rising at 13.01 per cent from 6.12 per cent in this period.

Source: Ministry of statistics and programme implementation (Mospi) for CPI and Commerce ministry for WPI

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Govt to release inflation index for 10 services on trial basis in June

Source: The Hindu Business Line, May 08, 2018

The government will come out with a Producers’ Price Index (PPI) next month for 10 services, including telecom and railways, on experimental basis, a government official said today. The move will help track inflation in these services, which will also include ports, postal, insurance, banking, transportation and air travel. “Services PPI will be released next month,” the official said.

Two major indices are used currently for tracking price movement — Wholesale Price Index (WPI) and Consumer Price Index (CPI). While the WPI measures price movement of goods in wholesale markets, the CPI tracks inflation at the retail level and also includes certain services.

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Falling Re, rising crude reignite inflation fears

download (3)Source: The Hindu Business Line, May 07, 2018

New Delhi: The Narendra Modi government approaches its fourth anniversary on a distinctly inauspicious note, with crude oil prices touching a four-year high and the rupee sinking to below 67 to a dollar. This is likely to lead to higher inflation and a further hardening of interest rates.

The deepening economic crisis in Venezuela and suspense over the US decision regarding sanctions on Iran fuelled a rally in Brent crude oil futures on Monday. It opened at $75 a barrel and hit $75.95, its highest since November 2014. This movement will affect the price at which Indian refiners buy their crude.The Indian basket of crude oil represents a derived package, comprising Sour grade (Oman & Dubai average) and Sweet grade (Brent Dated) crude oil processed in Indian refineries in the ratio of 72.38:27.62.

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WPI inflation eases marginally to 2.47% in March

download (3)Source: The Hindu Business Line, Apr 16, 2018

New Delhi: The Wholesale Price Index (WPI)-based inflation came in at 2.47 per cent for March 2018, below market expectations. This latest WPI inflation print is the lowest since July 2017. In February this year, WPI inflation had come in at 2.48 per cent.

It may be recalled that WPI had come in at 5.11 per cent in March last year.Meanwhile, manufactured products inflation for March 2018 came in at 3.03 per cent, lower than 3.22 per cent in the same month last year. Food articles inflation contracted in March 2018 at 0.29 per cent.

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Retail inflation expected to be five-month low as food prices drop

download (2).jpgSource: Business Standard, Apr 11, 2018

Indian retail inflation was expected to have eased to a five-month low in March as increases in food prices slowed once again but remained above the central bank’s medium-term target, a Reuters poll found.

That, coupled with the latest data which showed Asia’s third-largest economy beat China to regain top spot as the fastest growing major economy. That should give policymakers some relief as they seek to keep inflation under control without hurting growth.

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